 |
 | ||||||
|
|||||||
 |
|
The Lamfalussy
legislative process
The Committee of Wise Men on the Regulation of European Securities Markets chaired by Baron Alexandre Lamfalussy was established by the Council of Economic and Finance Ministers on 17 July 2000. In 2001, this Committee concluded that European Union's regulatory system was unable to react quickly to changing market conditions, and failed to distinguish between essential principles and practical implementing rules. The Committee recommended a four-level approach to securities regulation. This process breaks up a legislative package into four levels. Each level is focused on a specific stage of the implementation of legislation. Level 1: Framework Principles The European Parliament and Council of the European Union establish only the core principles of the new law. The framework principles are the core political principles, the essential elements of each proposal. They reflect the key political choices to be taken by the European Parliament and the Council of Ministers on the basis of a proposal by the European Commission. Level 1 principles clearly specify the nature and the extent of the technical implementing measures that are be taken at the second level. The substantive content of what is delegated to the Level 2 procedure must be agreed by the Council of Ministers and the European Parliament. This is a key safeguard. The technical implementing powers for securities legislation are delegated to the Level 2 procedure through a Level 1 framework Directive/Regulation. Advantage: The legislative process would speed up – because the key Level 1 political co-decision negotiations between the Commission, the Council of Ministers and the European Parliament would focus solely on the essential issues and not on technical implementing details. Advantage: The process is flexible Level 2: Implementation of Principles. Detailed Technical Measures Two new Committees are established: The EU Securities Committee (ESC) which has a primarily regulatory function and the EU Securities Regulators Committee (ESRC) with advisory functions. This approach has recognized two layers in the legislation related to financial markets : 1. Basic political choices that can be translated into broad but sufficiently precise framework norms (Level 1) 2. More detailed technical measures, in full conformity with this framework, needed to implement the objectives pursued by the legislation (Level 2) Level 3: Strengthening Cooperation Among Regulators Regulators try to reach consensus and to develop interpretative recommendations, standards and guidelines. Cooperation and networking between national regulators is absolutely necessary at level 3 in order to have consistent and equivalent transposition of Level 1 and Level 2 legislation National regulators are encouraged to agree joint protocols for improving implementation and a peer review process to ensure consistent enforcement practice The essence of Level 3 is to greatly improve the consistency of the day to day transposition and implementation of Levels 1 and 2 legislation It is the national regulators who have the prime responsibility for this work – acting in a cooperative network. Level 4: Enforcement The European Commission is monitoring and is enforcing compliance. All actors have a role to play here, but the major responsibility falls on the European Commission, which has the legal duty to act as guardian of the European Treaties. Other parties have also important roles: Member States, regulators and the private sector all can improve enforcement of agreed Community law. The Commission, for example, needs complaints, information, and strong, well-researched cases. The European Parliament also informs the Commission of any areas where it believes Community Law is being breached. As in the other areas, a partnership approach between the public sector and private sector is necessary for efficiency and success. The four-level approach, the Lamfalussy process, has been applied to the following Directives:
|
|
|
